Private Banks show higher share of MSME customers, beats PSBs in govt backed credit New Delhi, 3 Jan (KNN ) According to the data from Nat...
Private Banks show higher share of MSME customers, beats PSBs in govt backed credit
New Delhi, 3 Jan (KNN) According to the data from National Credit Guarantee Trustee Co. Ltd cited by the Reserve Bank of India public sector banks have lagged behind their private peers in disbursing loans under the government backed credit guarantee scheme.
“Private banks showed greater tendency than public sector banks (PSBs) for utilizing the Emergency Credit Line Guarantee Scheme (ECLGS), covering a larger number of beneficiaries,” the regulator said in its Financial Stability Report.
As of November 12, private banks had disbursed INR 1.06 trillion of government guaranteed loans, while their state run rivals made INR 83,000 crore worth loans, data showed. Non-banking financial companies (NBFCs) disbursed INR 31,000 crore, followed by foreign banks at INR 5000 crore.
“Private banks have a higher share of micro, small and medium enterprise (MSME) customers as compared to state owned peers, and that could be one reason for higher disbursals by the former,” said Anil Gupta, vice president and sector head at ICRA Ltd as reported by mint.
Gupta said another reason is that, as compared to public sector banks, private lenders have restructured fewer loans to MSMEs and perhaps have disbursed more ECGLS loans instead. “However, if you look at data, the average ticket size of ECGLS loans from PSU banks is higher than their private peers,” he added.
India’s small businesses were the worst hit by the pandemic, crimping their ability to repay debt. However, the impact was somewhat cushioned by schemes introduced by the government and the regulator’s forbearance on classifying loans as non performing. That said, credit to MSMEs slowed by the end of September from March.
The decline, RBI said, was particularly noticeable in the sub INR 25 crore ticket size across major banks. While aggregate MSME exposure in state owned and private sector banks rose 1.9% from a year ago in September, loans in the sub INR 25 crore segment grew a meagre 0.28%.
